Judge rejects injunction that would have blocked arena project

A judge is poised to remove what is probably the final legal barrier before construction can begin on the new Sacramento Kings arena.

Sacramento Superior Court Judge Timothy Frawley, in a tentative ruling, rejected a citizen group’s request for an injunction that would have stopped the $477 million project from moving forward until the lawsuit was resolved. Frawley could make a final ruling as early as today after a hearing on the matter.

The Kings have said they expect to begin demolition on the eastern end of Downtown Plaza sometime before the end of the month, shortly after the team closes on the financing for its share of the project. Kings spokeswoman Laura Braden said the team wouldn’t comment on Frawley’s ruling until it becomes final.

A group led by Adriana Saltonstall, a onetime Caltrans director, sued the city in late May, arguing the arena project violates the California Environmental Quality Act. The suit says the arena would create enormous environmental problems in the central city and could lead to postgame riots in the streets.

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In its quest to prevent the project from getting underway, the Saltonstall group faced a difficult legal challenge. Under a state law written specifically to expedite the arena project, SB 743, the group would have to show “imminent threat to the public health and safety,” or evidence of peril to American Indian artifacts, to get an injunction halting construction.

Frawley said the citizens couldn’t prove their case.

“Petitioners make only passing arguments, unsupported with citation to authority or evidence, that construction of the downtown arena presents an ‘imminent threat to the public health and safety’ or would adversely affect ‘unforeseen important’ historical/archaeological artificats or ecological values,” Frawley wrote.

Frawley also turned aside the group’s claim that SB 743 is unconstitutional. The bill was authored by Senate President Pro Tem Darrell Steinberg, D-Sacramento.

City officials and the Kings had warned in court papers that an injunction could cause extraordinary delays and possibly jeopardize the arena, which is supposed to open in October 2016. The cost of the delay could top $100 million, the team said.

If the building isn’t done by 2017, team officials said, the NBA could buy the Kings and move them out of town.

The Saltonstall group called that an empty threat. “The citizens double dare the city to produce real evidence that the NBA will yank the Kings if the subject corporate arena is not built by a certain time,” lawyer Kelly Smith said in papers filed last week.

Former NBA Commissioner David Stern first revealed the possibility that the team could be moved out of town in an interview last year with The Sacramento Bee. Stern said the Kings’ new owners, a group led by Vivek Ranadive, accepted the buyout option as part of the NBA’s rejection of a plan by the former owners to relocate to Seattle.

The group’s lawyer was unavailable for comment Thursday. A second group has filed its own CEQA challenge against the arena project, but hasn’t yet sought an injunction.

Meanwhile, City Treasurer Russ Fehr said Standard & Poor’s Ratings Services increased the city’s credit rating for lease revenue bonds – the kind of financing that will be used for the arena. Fehr said the improvement would lead to a lower interest rate for the arena bonds and would likely save the city “hundreds of thousands of dollars” every year in its repayment of the financing.

The city’s credit rating for lease revenue bonds improved to A-plus from A. S&P also raised the city’s overall credit rating to AA-minus from A-plus. The rating agency cited the city’s “improved finances” and other factors.

The city can’t issue the arena bonds until it resolves the CEQA challenges, a lawsuit sets the purchase price for a building at Downtown Plaza, and the project contractor delivers a guaranteed maximum price. Because those hurdles won’t be completed until next year, the city expects soon to enter into a contract that guarantees the bonds will be issued.

The Kings are contributing $222 million to the project, and the city is adding $255 million.